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The chief executive of Deutsche Bank’s asset manager DWS has argued that US President Donald Trump’s tariff policies have proved a powerful, if uncomfortable, catalyst for long-overdue economic reforms in Europe.
In an interview with the Financial Times, Stefan Hoops said that while rising tariffs and geopolitical tension had rattled global markets, they had also jolted Europe out of “complacent, lethargic behaviour” surrounding infrastructure and defence spending.
“Europe has always been about ability versus willingness to really compete . . . We have plenty of savings, we have great innovation, and we have fiscal space. There are lots of things we could do, we just never did them,” Hoops added.
“The decisions, the announcements by the US president, have simply pushed Europe out of its pretty complacent, lethargic behaviour.”
Hoops, who took over at the €1tn asset manager in 2022, said the EU’s rearmament push and Germany’s plan to unleash defence spending and overhaul its infrastructure were irreversible shifts following Trump’s threats to end US security guarantees. “This is putting Germany on a fundamentally different growth path than we otherwise would have been on,” he said.
Trump’s geopolitical realignment, which includes an ambiguous position towards defending European allies if they came under attack, has led to major defence spending plans from countries including Germany, France and Britain.
Indicating that Trump’s antagonistic approach may be crude but effective, he said: “You might question the method, but the outcome is that Europe is finally starting to move.”
Hoops acknowledged that Trump’s behaviour could have long-term costs, potentially damaging international co-operation on climate, research, and trade. But on balance, he said Europe was likely to perform better economically as a result of new spending plans, avoiding the kind of recession that many economists fear the US could fall into as a result of trade-related turmoil.
The US Federal Reserve said on Wednesday that the uncertainty about the future of the economy had increased as the risk of higher unemployment and inflation had risen.
“I think that people have become less optimistic on the US and less pessimistic on Europe,” said Hoops.
The German executive said that it was too soon to determine whether the US would suffer a recession, however, he added: “I’m more worried about a lower growth path than the US otherwise would have been on, as opposed to a recession, which is typically going to lead to a rebound.”
The market volatility thrown off by trade turmoil has forced asset managers to reallocate portfolios, with many pulling money from US equities. But Hoops said the uncertainty would sift out the best investors from the worst.
“This is the year of truth for active asset management,” he said. “If you can’t find ways to differentiate in this environment — marked by dispersion, divergence, and structural change — then when can you?”
He added that volatility would also likely drive dealmaking among asset managers. “I feel that the current market behaviour will simply force consolidation, and not by choice . . . which would be interesting.”
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